Cambridge LLP’s clients had advanced funds to a family member and, as security, registered a second mortgage against the family member’s property. The mortgage was executed and supported by consideration.

The first mortgagee subsequently initiated enforcement proceedings and sold the property. After satisfaction of what was owed to the first lender, some proceeds remained. As a second ranking secured creditor, Cambridge LLP’s client took the position that it was entitled to the surplus funds.

However, two execution creditors challenged distribution of the proceeds, alleging that the second mortgage constituted a preference intended to defeat creditors. The two competing writ holders were (i) a law firm that formerly represented the family member, which obtained a default judgment and registered a writ and, (ii) the family member’s former spouse, who obtained a substantial costs award in an unrelated family proceeding.

Cambridge LLP’s clients commenced an Application and both the creditors actively contested the Application and asserted that the surplus funds should be paid to them rather than our clients.

Cambrige LLP maintained the position that the mortgage was validly registered, consideration had been advanced, the mortgage predated writ registrations, and that there was no intention to defeat creditors. The dispute raised complex issues of priority, intent, and alleged creditor preference.

Following negotiations, the dispute settled with Cambridge LLP paying a nuisance amount to the creditors in exchange for the remaining surplus funds from the power of sale being released to Cambridge LLP’s clients.

Cambridge LLP successfully defended a motion brought by a mortgagor seeking leave after breaching a peremptory order. In a February 9, 2026 endorsement, the Ontario Superior Court of Justice dismissed a motion by 2567616 Ontario Inc. and Harmander Gill seeking relief from a peremptory deadline to file responding materials in a mortgage enforcement summary trial.

The defendants failed to comply with an August 22, 2025 deadline imposed by a prior court order. They asked the Court to permit late filing based on alleged ineffective assistance from counsel, the plaintiff’s own delay, personal stress and medical issues, and the need to respond to abuse-related allegations raised by a co-guarantor.

The Court rejected each argument.

Most significantly, although the defendants blamed former counsel for missing the deadline, no proposed responding affidavit was filed with the motion. The Court held that relief from a peremptory order requires the moving party to demonstrate the materiality of the evidence they seek to file. Without seeing the affidavit, the Court could not assess whether justice required permitting late evidence. Granting relief in those circumstances would amount to an “unmerited free pass.”

The Court also found that:

1. Any issues with the plaintiff’s evidence were irrelevant to the defendants’ non-compliance.
2. The defendant’s personal circumstances did not credibly explain the delay.
3. Allowing a last-minute affidavit would unfairly prejudice the co-guarantor, whose defence includes allegations of duress in signing the guarantee.

The motion was dismissed, and costs were awarded on a partial indemnity basis: $10,000 to the plaintiff and $20,000 to the co-defendant, payable within 30 days.